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Hostess Brands Inc. said it used wages that were supposed to help fund employee pensions for the company's operations as it sank toward bankruptcy.
It isn't clear how many of the Irving, Texas, company's workers were affected by the move or how much money never wound up in their pension plans as promised.
After the company said in August 2011 that it would stop making pension contributions, the foregone wages weren't put toward the pension. Nor were they restored.
The maker of Twinkies, Ho-Hos and Wonder Bread filed for bankruptcy protection in January and shut down last month following a strike by one of the unions representing Hostess workers. A judge is overseeing the sale of company assets.
Gregory Rayburn, Hostess's chief executive officer, said in an interview it is "terrible" that employee wages earmarked for the pension were steered elsewhere by the company.
"I think it's like a lot of things in this case," he added. "It's not a good situation to have."Davis at his home in Emporia, Kan. (Ryan Nicholson/WSJ)Mr. Rayburn became chief executive in March and learned about the issue shortly before the company shut down, he said. "Whatever the circumstances were, whatever those decisions were, I wasn't there," he said.
A spokeswoman for Hostess's previous top executive, Brian Driscoll, declined to comment.
Hostess hasn't previously acknowledged that the foregone wages went toward its operations.

"It's what lawyers call betrayal without remedy," said James P. Baker, a partner at Baker & McKenzie LLP who specializes in employee benefits and isn't involved in the Hostess case. "It's sad, but that stuff does happen, unfortunately."
The decision to cease pension contributions angered many employees. After the bankruptcy filing, Hostess tangled with the International Brotherhood of Teamsters and the Bakery, Confectionery, Tobacco and Grain Millers International Union to renegotiate labor contracts.
While the Teamsters union agreed in September to a compromise, resistance from the bakers union was fierce.
Halted pension contributions were a major factor in the bakers union's refusal to make a deal with the company. After a U.S. bankruptcy judge granted Hostess's request to impose a new contract, the union's employees went on strike. Hostess then moved to liquidate the company.
The bakers union represented about 5,600 of the company's 18,500 employees.
"The company's cessation of making pension contributions was a critical component of the bakers' decision" to walk off the job, said Jeffrey Freund of Bredhoff & Kaiser PLLC, a lawyer for the union.
"If they had continued to fund the pension, I think we'd still be working there today," said Craig Davis, a 44-year-old forklift operator who loaded trucks with Twinkies, cupcakes and sweet rolls at an Emporia, Kan., bakery, for nearly 22 years.
Hostess's retirees receive payments mostly from so-called multiemployer pension plans. Such pensions get contributions from various companies in a particular industry. Hostess's pension plans still are making payouts to retirees.
Most companies provide pensions through single-employer plans that they fund themselves. When companies with these plans file for bankruptcy protection, they sometimes terminate the plans, leading the Pension Benefit Guaranty Corp., the government agency that insures corporate pensions, to take over the plans and make payouts to their retirees.
With the multiemployer plans from which most Hostess retirees receive benefits, the PBGC doesn't step in unless the plans become insolvent. If that happened, the PBGC would send roughly $12,870 for each employee with at least 30 years of service, according to an agency spokesman.
The Bakery & Confectionary Union & Industry International Pension Fund, the largest fund covering Hostess bakers, was 72% funded when Hostess stopped making contributions, the company said.
Teamster-represented employees at Hostess didn't contribute a portion of their wages toward pensions, a union spokesman said. But among workers in the bakers union, it was "standard practice," said Mr. Rayburn, Hostess's CEO.
Hostess had 115 different collective-bargaining agreements with employees represented by the bakers union. Each contract let those workers choose an amount of wages to direct to the pension plan.
For example, John Jordan, a union official and former Hostess employee, said workers at a Hostess factory in Biddeford, Maine, agreed to plow 28 cents of their 30-cents-an-hour wage increase in November 2010 into the pension plan.
Hostess was supposed to take the additional 28 cents an hour and contribute it to the workers' pension plan.
"This local was very aggressive about saving for the future," he said.
Employees in Biddeford began directing wages toward pensions in 1955, and the amount grew to $4.28 an hour per employee.
Amounts varied by location, and it isn't clear how many unionized employee groups participated in the arrangement.
In five months before this past January's bankruptcy filing, the company missed payments to the main baker pension fund totaling $22.1 million, Mr. Freund said.
After that, forgone pension payments added up at a rate of $3 million to $4 million a month until Hostess formally rejected its contracts with the union. The figures include company contributions and employee wages that were earmarked for the pension, according to Mr. Freund.
Mr. Driscoll, the former Hostess chief executive, told employees in an August 2011 letter that the decision to "temporarily suspend" pension contributions was a "necessary bridge" to a larger plan to turn around Hostess.
In the fiscal year ended in May 2011, Hostess had a net loss of $341 million on sales of $2.5 billion.
As the company's financial condition deteriorated, "whatever cash it had was being used to fund the business, to keep it afloat," Mr. Rayburn said.
It might have been "impossible" to undo the agreements that called for Hostess to make pension contributions using employee money, Mr. Rayburn added. One reason: Hostess could have been too short of cash to make up the difference, though he said he isn't sure.

yup, steal from your help.. then cry when they stike and every fool outside the "issue" including the media call the union thugs,selfish,and only f'n themselves not being a "team player" when needed..
took the media how many weeks after them making the union workers look like a-holes to get it right.. when most will pass by the store..
shamefull..

12-01-2012 08:33 PM

lakeroadster

I'll give Geardheadslife credit.. he is consistent.

Bottom line is the owners and the upper management will always get the breaks. Face the facts, learn from it and use it in your favor. Start your own business. Such is life. With great risk comes great reward.

12-01-2012 06:53 PM

poncho62

I just heard you dont get gum in baseball cards anymore...Whadda rip......

12-01-2012 06:06 PM

cobalt327

Just heard they're yanking the Bazooka Joe comics from the bubble gum.

12-01-2012 03:05 PM

wretched ratchet

Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

12-01-2012 02:15 PM

gearheadslife

11-22-2012 02:59 PM

poncho62

Quote:

Originally Posted by gearheadslife

union people are home with family.. unlike say the walmart worker that will be clocking in at 1pm today..
all so the selfish a-holes can shop for a gift they'll give 34 days from now
14 hours earlyer than before..

No sense Christmas (can I say Christmas?) shopping this year...Some guy named Nostradamus said so.......

11-22-2012 07:28 AM

gearheadslife

Quote:

Originally Posted by lakeroadster

Now that's just funny right there...

union people are home with family.. unlike say the walmart worker that will be clocking in at 1pm today..
all so the selfish a-holes can shop for a gift they'll give 34 days from now
14 hours earlyer than before..

11-22-2012 06:34 AM

lakeroadster

Quote:

Originally Posted by wretched ratchet

Wow, you "Unioners" must be getting triple time posting on Thanksgiving, eh????...

Now that's just funny right there...

11-22-2012 03:57 AM

wretched ratchet

Wow, you "Unioners" must be getting triple time posting on Thanksgiving, eh????

Wishing you ALL the happiest and most blessed Holiday,
Em

11-21-2012 07:23 PM

poncho62

99.9%...I rest my case

11-21-2012 07:18 PM

against all odds

Quote:

Originally Posted by poncho62

99.9% of the people here realize its about the people involved, not the cake.

But it IS about the cake, man. If it weren't for the twinkies there would not be any controversy over jobs.

The problem is we are all putting the jobs before the cake. The very reason for the existence of the jobs was/is the cake.

(p.s.---this is funny---we got two separate arguments going on here.......) This, in itself makes the thread a winner. Not the topic of employment as it relates to hostess, again.

11-21-2012 07:07 PM

lakeroadster

Quote:

Originally Posted by DougMN

Where do you get " running away" do you have any facts or figures to back it up?

Each post I have made has links to information lifted from various sources.

Comments like "What's wrong with you?" and "More company propaganda" add nothing to the dialouge of this thread, without some data to justify your position.

11-21-2012 07:04 PM

poncho62

Quote:

Originally Posted by against all odds

What we, as a society, need to be focused on are (in order of importance):

1) Identification, prevention of child abuse in any form. As well as abuse in general.

2) Health and medical advancement.

3) Space exploration.

Not fussing over cake.

99.9% of the people here realize its about the people involved, not the cake.

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